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Posts Tagged ‘CRM’

I spent an interesting day at Harvard Law School last week at the invitation of Doc Searls for a conference on the intersection of CRM and VRM or vendor relationship management. Doc’s involved with the Berkman Center at Harvard, which sponsors research into issues of Law and the Internet among other things. He’s also one of the authors of The Cluetrain Manifesto which should be required reading in our line of work. Lots of other CRM folk were too there including analyst Mitch Lieberman and Ed Sullivan from Radian6. We tweeted up a storm and you can search on the tag #VRMCRM2010.

It was an interesting and enlightening day and I only wish I’d had enough time to attend the second day but I had commitments. That said it’s hard to describe what I found out but let me try.

VRM, in my humble construction is in some ways a mirror image of CRM in that it tries to address what I call the at-large issues of the vendor-customer interface. But the two differ in many ways that are good and constructive. Where CRM focuses on issues around sales, marketing, service and support, VRM takes a more holistic view and tries to answer some of the more in-depth issues like the nature of the legal relationship between the parties and what contracts between them should and should not contain.

That’s grossly over simplified and one-dimensional. Other aspects include how much personal data a person should store about his or her needs and finances and where it should be stored. Should all of your household data like income, mortgage status and the vendor relationships you have be stored on line and by whom are typical questions and things get complicated pretty quickly. Then there’s the mega question, who do you trust and what does trust mean anyhow?

At the start of a panel I was on with Mitch I said I thought I’d gotten too much information and felt like a baby in need of a nap. Maybe you get the idea.

But the big difference between VRM and CRM to me, and this is probably a gross over simplification, is that CRM seems more bottom up and VRM more top down. VRM seems to me to be seeking solutions that can be coded and provided by vendors or other parties for customers to use but who pays for it and who trusts such a solution are good questions.

On the other hand CRM has the same kind of top down approach but what makes it different is the social aspect, which is bottom up. I don’t see much penetration of social media into VRM yet and I think that’s a bet that’s being missed, at least for now. Social media used correctly is a big deal because it provides a missing element, something that takes CRM and potentially VRM from a more or less static perspective to something more dynamic.

The great thing about social CRM is that it lets the genie out of the bottle. It introduces randomness and uncertainty to the puzzle and that’s largely a good thing. You can’t program a customer relationship, there are too many permutations and customers do things you just can’t always predict.

My big takeaway from the conference is the wisdom of crowds, the idea that since you can’t predict, take a deep breath and stop trying. Instead, just ask the customer and, if you do it right, you’ll get amazing insights. It struck me that the wisdom of crowds is, perhaps, one thing that VRM could incorporate with great success.

In one discussion I recall, someone asked a question about what it would take to gather customer input with one hundred percent accuracy. I see that as a problem because nothing gets to the century mark and trying is an exercise in futility. Crowd wisdom doesn’t go there, it leverages the idea that the majority of a large enough sample managed to incorporate the ideas of decentralization, independence and diversity does the job.

Crowd wisdom and social media are not silver bullets for improving VRM or CRM for that matter. For the most part VRM delves into questions that CRM hasn’t even gotten to yet. Nonetheless, CRM and VRM practitioners appear to me to have more than a few misconceptions about the other and forums like Doc Searls’ last week are a welcome introduction of people and attempt at melding of ideas. All of us could gain something from more of these. If nothing else, in the words of Mitch Lieberman, we’d all feel smarter by being in the surroundings of Harvard Law School.

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Yesterday’s news that Apple’s market value slightly eclipsed Microsoft’s was significant and in my haste to get out a post on it, I may not have been able to apply all of my analytical effort so I want to try again.

First, to cover basics, the market value of a company is simply the value of a share times all of the shares outstanding. A company’s market value fluctuates daily with the rise and fall of its share price. Today will undoubtedly be different. You can find the values in the original New York Times article that my post referenced.

What’s significant about this news is not simply that Apple overtook Microsoft by a little bit on a hot spring day. But if you view Microsoft as filling the niche once occupied by IBM as the technology supplier to business and if you view Apple as the technology supplier to consumers many things come into focus.

For instance, Microsoft has been a relative laggard in providing what might be called creature comforts for computer users. It was late to the game with Windows after Apple had deployed the Macintosh, late to deliver CRM and it was late to deliver a software as a service (SaaS) offering. Nothing wrong with that, Microsoft simply demands a clear business purpose before launching into a new area.

On the other hand, though, Apple has brought to market numerous new categories of devices starting with the iPod that changed the way we live. Forget devices that start with “i” for the moment and think about Garage Band and iMovie. They are examples of ways that Apple has changed the way creative people work and in the process these tools have democratized some formerly stodgy businesses. Then there’s iTunes and if you want to talk about (formerly) stodgy businesses, you need only look at the music industry.

Of course Apple is not alone in this democratic revolution, you have to include companies like Salesforce.com and the hundreds of partner companies it has spawned and Adobe whose products run across platforms today but whose origins are Mac.

So if you look at the marketplace today, the fact that Apple is worth a bit more than Microsoft says that the end customer is becoming more important than the corporation. What we do on our iPads, iPhones, iPods and their imitators (some of which run a Microsoft OS) is as economically important as what we do on our desktops and laptops.

Last week at Sapphire, SAP’s user conference in Orlando, we saw a company doing many things but one of the more important things SAP did was to fully acknowledge the importance of the customer and promise to put the customer more in the center of what it does as an enterprise software company. Sage did some of the same things at their conference, Insights. At the time, I referred to these and other things happening in our industry as the triumph of CRM but in a sense, it was also the triumph of Apple, just a week before Wall Street made it official.

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Last week was busy in a good way and also in ways that we have not seen in a while and at least some if that busy-ness showed promise for the economy and our industry. In no particular order, Cloud9 Analytics announced it closed its C round financing, SAP held its user meeting in Orlando, Sage held its partner meeting in Denver, and Microsoft sued Salesforce.

You might think that last bit didn’t fit with the rest of the list and aside, from the fact it happened last week, it doesn’t. But it struck me that the two companies are getting into each other’s faces over a market that has significant upside. Regardless of its merits, this suit suggests to me that Microsoft, at least, thinks important issues need to be decided before the market really heats up. The way suits move through courts it’s unlikely we’ll see a result soon but to be fought over like this — it makes you feel like the prettiest girl at the ball doesn’t it?

Perhaps the most interesting item in CRM, for me at least, is that Cloud9 raised eight million dollars. Cloud9 is certainly worthy of investment but the announcement says more about the state of the venture community that had been almost sleeping in the last year. According to the National Venture Capital Association (NVCA), 2009 was the worst year for venture funding since 1997, with less than $18 billion invested and just over $15 billion raised.

Last quarter biotech led software in investment dollars, a trend that has been developing for some time. That high tech is not leading the venture parade should be a concern and the trend bears watching.

I know what you are thinking, you can still do a lot with eighteen billion but it pales in comparison with the hundred billion invested in 2000 or the twenty to thirty billion more typically invested each year in the last decade.

The Cloud9 investment is a silver lining for the industry but the rainbow is still not shining. Keep in mind that this represents a C round which means the investors are looking to a liquidity event in the relatively near term. That’s completely different from the longer-range expectations held in a typical A round. Nonetheless, it’s good to see money being put to work and the optimism that it implies.

Also on the optimism scale Sage and SAP convened meetings with their users. Sage is continuing to evolve itself and as Doug Meyer, Chief Customer Officer told me and CEO Sue Swenson said in her keynote, the company is going all out to make itself easy and fun to work with. Customer experience is a top priority as is product evolution and Sage showed it is serious about the on-demand market by launching a version of SalesLogix that will be delivered from the cloud. All indications are that the partner community is receiving the offering well and general availability is scheduled for later this year.

Although I didn’t go to Orlando (because I was in Denver) from the emissions at Sapphire it seems like the ERP world has discovered the importance of crowdsourcing and the wisdom of crowds and their eponymous books. The tweet-storm coming from Orlando can be summarized in Co-CEO Bill McDermott’s keynote sound bite: “SAP embraces People, By Design.” Promising greater collaboration with its customers as well as the tools to enable SAP customers to more effectively engage in collaborative business processes with end customers, SAP unveiled new products and new attitudes. Since I was not there it’s best to get the skinny from those who were, including Sameer Patel, Vinnie Mirchandini and Dennis Howlett to name a few.

The collaboration thing has me more than intrigued. I can’t find a soul who cares to object to the idea and that tells me that CRM and our focus on all things social over the last few years is having an impact that goes well beyond front office borders. You might call it the triumph of CRM. It became readily apparent last week and, the economy not withstanding, that may be the biggest news coming out of one of the best weeks in CRM we have had in a while.

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If you attended the salesforce.com soiree in New York on Thursday you could be forgiven if you thought the company was done with announcements for a while but if you thought that you’d also be wrong. Kendal Collins, Salesforce CMO, told me that there will be another announcement on April 27 in San Francisco and according to Collins, “This will be big.” That in itself is not much news because it appears Salesforce only has trouble doing “small.”

There is a bit more though. For this event the company will be opening registration on its site in the next day or so and it will be leaking the name of the product that will be announced but no other details. So look for “NEWNEWforce.com” as a new product on their site with no other defining formation.

Looks like Salesforce has been bit by the Apple announcement bug. It reminds me of the Geneva Convention but all we’re getting is name, no rank or serial number.

If I had to guess, I would reason that CRM applications and the platform have seen quite a bit of attention in the last few months and the development side of the house might be needing some love. I dunno, but I am thinking that the late April new, new force will have something to do with development. Maybe Chatter for the development community? Who knows? There, I started a rumor.

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There’s a huge discussion raging on the Internet started by a provocative question from Bob Thompson. Can you do Social CRM without social media/networks?

The question came to me via Paul Greenberg’s blog and I find it curious that I am not in agreement with much of the discussion or, more to the point, I might agree with the conclusion but not the underpinnings.

The discussion — and there is a lot of it to wade through — and its conclusion falls too quickly, in my estimate, to Paul’s declaration that,

“The business ecosystem is controlled by the customer. Period. That means its NOT controlled by the company and its NOT jointly controlled. The controller of this ecosystem is going to be whatever group drives demand and, currently that is I think, indisputably, the customer (if it isn’t that – meaning you want to dispute it – prove it to me.”

Now I’m feeling like John McEnroe in the rental car commercial, at first screaming “Take any car? You cannot be serious!” Then meekly saying “Ok.”

So, Ok!

First, let’s be clear, it is a social and socialized world out there. Customers do have the upper hand in an economy with a bias to save rather than spend. Demand is weak. Customers do speak with one another and share the good, bad and ugly about their vendors. There’s no use disputing this, there is too much evidence. However, let’s also be clear on another point, this more defines a retail situation than business to business where vendor-customer partnership is governed by long-term agreements and the idea at least receives lip service these days.

Even if we are simply talking about business to consumer situation (70% of the economy), I think we might be looking through the wrong end of the telescope when we say it’s all in customers’ hands. Customers frequently are not Social — a minority of them are and catering to a vocal minority without controls on what amounts to market experiments can be dicey. It’s part of a problem that emanates from over use of the word community to refer to the customer base and I think that’s a mistake precisely because only a minority of customers are Social.

As I have written many times before, membership is not participation. Numerous studies show that most members simply observe and that’s a long way from active participation. A Harvard Business School study recently revealed that 90 per cent of Tweets came from ten percent of Twitter members. The same study showed that the average Twitter member issued one tweet every 74 days. Be still may heart! Can the system handle all the input? Pew Research recently published a big study showing that majorities in the 60 percent range at popular Social networking sites were women. There’s nothing wrong with any of this, but it does poke a hole in theories about Social customers and efficacy of raw Social media as business tools for gauging customers.

In my mind, we’re using Social CRM as a paradigm extension for conventional CRM. Translated, that means we use Social media to find less expensive ways to broadcast messages or conduct uncontrolled experiments (a.k.a. surveys) on customers. The result is a dog’s breakfast.

The result of all this is a system that is badly reactionary when it needs to be proactive. It is reactive to follow customers around trying to capture a crumb of an idea in the hope of extrapolating it into a full-blown product idea, marketing message or offer. It’s like playing CSI by following a bad guy around until he spits on the street so that you can swipe up the sample and extract DNA. The CSI approach tells you what was but doesn’t shed much light on what will be and we really want to know what will be.

The right approach is to ask customers directly what they think and to do it before a crisis hits a la Nestle. That means having ongoing deep market research into customer attitudes, biases and needs. This is real proactivity and it provides the necessary insights into customer opinion, motivation and bias that you need today to make rational decisions about product, messaging and interaction. There’s no sense waiting until you’ve stirred up a hornets’ nest to sample customer opinion because it won’t be reliable.

To do this, forget crowd sourcing. I know it’s popular, but it is limited. You can’t learn anything new or gain real insight from sampling the opinion of people who happen to be mad enough to express it. Research shows that these opinions may only be a small sample and may not be indicative of the larger group. When we fall into this trap we end up reacting and reacting and reacting. First to what the minority said when it was mad, then to the mad over-reaction and so forth.

Getting out of this death spiral requires that we form real communities of people we select for their diversity and willingness to participate before anything hits the fan. Such communities exist and they are very useful but they require discipline and constancy — you can’t gen up a community only when you might want to know something about yesterday, you need to be in the game all the time.

The information we get out of these communities will not be perfect and, in fact, you might want to call it qualitative. In that case you will at least have a hypothesis to test with a larger group or even the whole population. But you’ll be proactive in this, not waiting for something to hit you in the face that you will then have to react to. More importantly you will have real numbers to work with.

So, to the question, can you do Social CRM without technology? I think, yes, but in a limited way. Think of it as going from Boston to San Francisco. People did this long before there were rails and airplanes. But they did so infrequently simply because of the expense and rigor of the trip.

Paul Greenberg gives some great examples of Social CRM without technology but the thing you have to acknowledge is that it doesn’t scale. The real question that I think Bob Thompson was asking, or at least the one I would like to respond to, is can it be done today in our civilization to meet the needs of both customers and vendors? I think, no, it can’t. You need technology to do something serious like that.

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Thanks to all of you who took the time to comment on yesterday’s post. The response was very positive both in emails and in comments. The experience showed me that there are at least two schools of thought on the subject. One side is the vendor and analyst camp, which is supportive of the customer experience idea. The other side is customers who have seen the results and many of whom are not impressed. I consider myself in the middle. I understand the usefulness of customer experience ideas but I am not persuaded that the empathetic approach is enough.

I went digging at the Harvard Business School website and found a trove of commentary by business gurus on the shortcomings of customer experience and if you are interested in the subject, please check it out. What comes across in all this is that while a focus on customer experience is nice — even good — it’s not enough if there’s no culture behind it. Not just any culture but one that sees customer input as more than a bother but as a real opportunity.

I have started calling the information that customers want to share with their vendors, intellectual property because it is. Customers have valuable information that can benefit their vendors exclusively and it’s free if a vendor knows how to ask. The asking should take place in communities set up to gather the information and such communities also can help surface new product and service ideas. Even policy can be influenced through communities and it’s all intellectual property.

So what might it mean if vendors aren’t collecting this freely available IP? They’re probably leaving money on the table. Now, with that in mind, should customer service or customer interaction be seen as a cost or a hidden benefit?

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I was in a conversation with the CEO of a CRM company the other day discussing the latest moves in the industry over ideas like SaaS, single tenant and multitenant deployments. It has occurred to me and I said this to the CEO, that we spend far too much time and brain matter on the delivery model and too little on how we provide value to the customer.

It’s a problem that you see a lot if you know what to look for. It happens whenever one vendor or even an individual comes up with an idea that seems to attract customer attention. Once that happens, the competition is all over the idea like flies on a fresh meadow muffin and the whole competition moves to one dimension. I’ve seen it on numerous occasions in my ten years covering CRM and the single tenant vs. multitenant debate is just one example. Other examples include the customer experience and social CRM.

Now, to be sure, all of these ideas are important but they also hit wide of the mark. The mark ought to be how I as a vendor deliver value to you the customer and whether that value is sufficient to warrant a purchase. Ideas like low cost and fast implementation or improving the customer experience are, by their nature, designed to appeal to the buying influences in the complex sale of CRM. They appeal to the CFO or the CEO. Customer experience may appeal to the VP of sales or the VP of service and so on. But you can’t take any of that to the bank.

There is an implicit assumption in all of this, that a CRM product is in all other respects the same as all others in the market and that this single idea is the one worth contending over. That’s a road to disaster if you ask me because only one company can be the best at the attribute in question and then everyone else is scrambling for second place. That’s a path — no, make that a short cut — to commoditization.

It’s a harder sell to talk about the customer’s needs and what makes them unique and deserving of unique treatment — often the customer doesn’t know and the sales representative might not have the training or knowledge to help figure it all out and sell to those needs. Too often in early markets customers buy market leading products regardless of their merits and vendors accommodate this need by bragging about market share.

If we could focus more on how we deliver specific value, the sales and marketing conversation would be richer and you might actually see one vendor competing for business based on a specific need as well as other vendors competing on delivery model or price etc. But that’s a scary place to be if you are a sales person. Your customer wouldn’t necessarily be comparing you with the other guys in an apples to apples way so how would you know if you were winning?

Selling has always been a numbers game meaning that sales people needed to see as many people as possible, have as many contacts and opportunities as possible in the hope of closing some of them. That was the original assumption of CRM. But if you are at all cognizant of the marketplace these days, tightness in the credit markets has caused a significant amount of demand destruction and that has changed the terms of selling.

We don’t have full pipelines because of demand destruction or, if we do, there are many more suspects who can’t buy for one reason or another tied to budget. In this world selling the advantages of your delivery model or your low cost may not be as valuable as telling your customer specifically how your product can help make money or save it.

We’re in a cross sell/up sell market today in which we’re trying to sell something else to a customer that has bought from us before. In that climate it should be easy to talk about using products that enhance a specific business process or function.